Assess the Effectiveness of SOX Legislation

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The Impact of the Sarbanes-Oxley Act (2002) The History of SOX The Public Company Accounting Reform and Investor Protection Act which is prominently referred to as the Sarbanes–Oxley Act (SOX) after the sponsors is a federal law of the United States that was enacted in 2002. Between 2000 and 2002, the US witnessed massive corporate scandals that led to the loss of millions for investors. At the top of these scandals were Enron Energy Company and the WorldCom telecommunications company. Through scrupulous methods, the managements of these enterprises in collaboration with their common auditor Arthur Andersen had managed to hide billions of dollars in losses. The resulting hyperinflation of false profit led to massive losses in investors. Enron, for example, had its stock price plummet from a high of 90.75 in the middle of 2000 to less than a dollar by the end of next year. The two companies ultimately went bankrupt heavily damaging the reputation of US security markets globally. (Tran, 2016) In an attempt to rescue the lucrativeness and reputation of the industry, Congress act hurriedly to improvise ways of reassuring investors on the safety of their investments. SOX Act was therefore implemented with the aim of curbing the endemic fraud levels in public companies as well are reassuring investors. As a reaction to the prevalent fraud revelations, House Representative Oxley and Senator Sarbanes independently supported bills in respective houses regarding the regulations of reporting in public corporations. (Study of the Sarbanes-Oxley Act of 2002 Section 404 Internal Control over Financial Reporting Requirements, 2009) Both bills received almost unanimous

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